What is a Mortgage Note
What is a Mortgage Note? Sometimes also they are referred to as a Mortgage Promissory Notes. If you are considering or already are a Note Broker assisting individuals in the sale of their Mortgage Promissory Notes, you're going to need to know what it is. My hope is to give you enough information to make a logical decision as to whether this type of business is right for you.
In short, It is a written agreement between a Borrower to make agreed upon payments to a Lender, with the specified real estate acting as collateral until the note is satisfied. The specifics of the Promissory Note will include all parties of the agreement, original balance, the legal description of the collateral, interest rate, the payment terms, late payment penalties if both parties agree, and how changes would be handled, including defaults. The most common methods of repayment are regular equal monthly installment payments, regular equal monthly installment payments and a balloon payment as the final installment, monthly interest only payments and principal payments later, or one lump sum payment on a specified date. Of course the above is only an example and you can agree to any other terms provided all parties agree. Other items can be included as well but the key to the entire document is that it is a legally binding agreement that must be agreed upon and signed by all parties involved. It is always strongly recommended that a Real Estate Lawyer prepare the document. It will be money well spent. It may seem like a simple document but if prepared incorrectly, or not in accordance with federal or state law, it will be a nightmare for you later.
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